MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition as of June 30, 2000, compared with December 31, 1999, and June 30, 1999, and the results of operations for the three-month and six-month periods ended June 30, 2000 and 1999 should be read in conjunction with the Company's unaudited consolidated financial statements and notes contained in this report. This discussion contains forward-looking statements that involve risks and uncertainties and, as such, future results could differ significantly from management's current expectations. See the last section of this discussion for further information on forward-looking statements.

OVERVIEW AND STRATEGY

The Company's operating subsidiaries were organized within the last nine years, with an average life of its six subsidiary banks of approximately five years. Wintrust has grown rapidly during the past few years and its Banks have been among the fastest growing community-oriented de novo banking operations in Illinois and the country. Because of the rapid growth, the historical performance of the Banks, FIFC and WAMC has been affected by costs associated with growing market share, establishing new de novo banks, opening new branch facilities, and building an experienced management team. The Company's financial performance over the past several years generally reflects improving profitability of the operating subsidiaries, as they mature, offset by the significant costs of opening new banks and branch facilities. The Company's experience has been that it

generally takes 13-24 months for new banking offices to first achieve operational profitability. Similarly, management currently expects a start-up phase for WAMC to continue for up to two more years before its operations become profitable.

Lake Forest Bank, Hinsdale Bank, North Shore Bank, Libertyville Bank, Barrington Bank and Crystal Lake Bank began operations in December 1991, October 1993, September 1994, October 1995, December 1996 and December 1997, respectively. Subsequent to those initial dates of operations, each of the Banks, except Barrington Bank, have established additional full-service banking facilities. FIFC began operations in 1990 and is primarily engaged in the business of financing insurance premiums written through independent insurance agents or brokers on a national basis for commercial customers. On September 30, 1998, WAMC began operations and offers a full range of trust and investment services at many of the Wintrust banks.

Crystal Lake Bank, since moving into its permanent location in downtown Crystal Lake in September 1998, opened a new drive-thru facility in March 1999 and a new full-service branch facility in south Crystal Lake in September 1999. In October 1999, North Shore Bank opened a new full-service branch facility in Skokie, Illinois. In February 2000, the Lake Forest Bank opened a new temporary branch facility in Highwood, Illinois. A permanent facility in Highwood is currently under construction and should be open later this year. Expenses related to these new banking operations and predominantly impact only the 2000 operating results presented in this discussion and analysis.

While committed to a continuing growth strategy, management's current focus is to balance further asset growth with earnings growth by seeking to more fully leverage the existing lending capacity within each of the Banks, FIFC, WAMC and Tricom. One aspect of this strategy is to continue to pursue specialized earning asset niches, and to maintain the mix of earning assets such that loans, which are higher-yielding, are kept at a level of between 85% and 90% of our deposit funds. Another aspect of this strategy is a continued focus on less aggressive deposit pricing at those Banks with significant market share and more established customer bases.

FIFC has been the Company's most significant specialized earning asset niche and is expected to reach in excess of $900 million in premium finance receivable volume during 2000. The majority of these receivables have been retained within the Banks' loan portfolios as part of the strategy noted above. However, since the second quarter of 1999, as a result of the continued solid growth in loan originations, FIFC has, from time to time, sold a portion of new receivables to an unrelated third party. In addition to recognizing gains on the sale of these receivables, the proceeds have provided the Company with additional liquidity. It is possible that similar future sales may occur depending on the level of new volume growth in relation to the desired capacity within the Banks' loan portfolios.

The October 1999 acquisition of Tricom is another significant step in the Company's strategy to pursue specialized earning asset niches. Tricom is a Milwaukee-based company that has been in business for approximately ten years and specializes in providing, on a national basis, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to clients in the temporary staffing industry. By virtue of the Company's funding resources, this acquisition will provide Tricom with additional capital necessary to expand its financing services in a national market. Tricom's revenue principally consists of interest income from financing activities and fee-based revenues from administrative services. In addition to expanding the Company's earning asset niches, this acquisition will add to the level of fee-based income and augment its community-based banking revenues.

Other newer specialized earning asset niches include Lake Forest Bank's MMF Leasing Services equipment leasing division, a previously established small business that was acquired in July 1998, and Barrington Bank's recently established program that provides lending and deposit services to condominium, homeowner and community associations. In addition, Hinsdale Bank's mortgage warehouse lending program provides loan and deposit services to approximately thirty mortgage brokerage companies located predominantly in the Chicago metropolitan area. The Company plans to continue pursuing the development or acquisition of other specialty finance businesses that generate assets suitable for bank investment and/or secondary market sales.

With the formation of WAMC, the Company is expanding the trust and investment management services that had already been provided prior to October 1998 through the trust department of the Lake Forest Bank. With a separately chartered trust subsidiary, the Company is now better able to offer trust and investment management services to all communities served by Wintrust banks, which management believes are some of the best trust markets in Illinois. In addition to offering these services to existing bank customers at each of the Banks, the Company believes WAMC can successfully compete for trust business by targeting small to mid-size businesses and newly affluent individuals whose needs command the personalized attention that is offered by WAMC's experienced trust professionals. Since the fourth quarter of 1998, WAMC has provided the services of experienced trust professionals at North Shore Bank, Hinsdale Bank and Barrington Bank. As in the past, a full complement of trust professionals continues to operate from offices at the Lake Forest Bank. Prospective trust and investment customers at Libertyville Bank and Crystal Lake Bank are currently being served on an appointment basis, as the need arises. Services offered by WAMC typically will include traditional trust products and services, as well as investment management, financial planning and 401(k) management services.

Similar to starting a de novo bank, the introduction of expanded trust services has caused relatively high overhead levels when compared to initial fee income generated to date. The overhead consists primarily of the salaries and benefits of experienced trust professionals. Management currently anticipates that WAMC's efforts to attract trust business will begin to generate sufficient trust fees to absorb the overhead of WAMC and make that entity a contributor to the Company's profits within the next two years.

RESULTS OF OPERATIONS

EARNINGS SUMMARY

Net income for the quarter ended June 30, 2000 totaled $3.3 million, an increase of $1.1 million, or 47%, over the second quarter of 1999. On a per share basis, net income for the second quarter of 2000 totaled $0.37 per diluted common share, a $0.10 per share, or 37%, increase over the second quarter of 1999. The return on average equity for the second quarter of 2000 increased to 13.86% from 11.55% for the prior year quarter.

For the six months ended June 30, 2000, net income totaled $6.4 million, or $0.72 per diluted common share, an increase of $2.3 million, or 57%, and $0.24 per diluted share, when compared to the same period in 1999.

                                                       For the Quarter Ended                       For the Quarter Ended
                                                           June 30, 2000                               June 30, 1999
                                              -----------------------------------------    ---------------------------------------
(dollars in thousands)                             Average      Interest       Rate            Average       Interest      Rate
----------------------
                                              ---------------- ------------- ----------    --------------- ------------- ---------

Liquidity management assets (1) (2)                $249,621       $ 4,038         6.51%       $ 213,506       $ 2,776        5.22%
Loans, net of unearned income (2)                 1,367,470        31,181         9.17        1,108,933        23,390        8.46
                                              ---------------- ------------- ----------    --------------- ------------- ---------
   Total earning assets                           1,617,091        35,219         8.76%       1,322,439        26,166        7.94%
                                              ---------------- ------------- ----------    --------------- ------------- ---------

Interest-bearing deposits                         1,399,332        18,299         5.26%       1,150,344        13,216        4.61%
Short-term borrowings and notes payable              70,450         1,093         6.24           55,400           566        4.10
Long-term debt - trust preferred securities          34,610           833         9.63           31,050           734        9.46
                                             ---------------- ------------- ----------    --------------- ------------- ---------
   Total interest-bearing liabilities             1,504,392        20,225         5.41%       1,236,794        14,516        4.71%
                                              ---------------- ------------- ----------    --------------- ------------- ---------

Tax equivalent net interest income                               $ 14,994                                    $ 11,650
                                                               =============                               =============
Net interest margin                                                               3.73%                                      3.53%
                                                                             ==========                                  =========
Core net interest margin(3)                                                       3.94%                                      3.76%
                                                                             ==========                                  =========
-------------------------------
(1)  Liquidity  management assets include securities,  interest earning deposits
     with banks and federal funds sold.
(2)  Interest  income  on  tax  advantaged  loans  and  securities   reflects  a
     tax-equivalent adjustment based on a marginal federal corporate tax rate of
     35% and 34% in 2000  and  1999,  respectively.  This  total  adjustment  is
     $145,000  and  $52,000  for the  quarters  ended  June 30,  2000 and  1999,
     respectively.
(3)  The core net interest margin excludes the interest expense  associated with
     the Company's Trust Preferred Securities.

                                                     For the Six Months Ended                    For the Six Months Ended
                                                          June 30, 2000                               June 30, 1999
                                             -----------------------------------------    ---------------------------------------
(dollars in thousands)                            Average      Interest       Rate            Average       Interest      Rate
----------------------
                                             ---------------- ------------- ----------    --------------- ------------- ---------

Liquidity management assets (1) (2)               $239,279       $ 7,619         6.40%       $ 207,772       $ 5,394        5.24%
Loans, net of unearned income (2)                1,340,473        60,025         9.01        1,068,225        45,090        8.51
                                             ---------------- ------------- ----------    --------------- ------------- ---------
   Total earning assets                          1,579,752        67,644         8.61%       1,275,997        50,484        7.98%
                                             ---------------- ------------- ----------    --------------- ------------- ---------

Interest-bearing deposits                        1,366,164        34,898         5.14%       1,122,122        25,766        4.63%
Short-term borrowings and notes payable             72,472         2,200         6.10           36,340           743        4.12
Long-term debt - trust preferred securities         32,830         1,568         9.55           31,050         1,469        9.46
                                             ---------------- ------------- ----------    --------------- ------------- ---------
   Total interest-bearing liabilities            1,471,466        38,666         5.28%       1,189,512        27,978        4.74%
                                             ---------------- ------------- ----------    --------------- ------------- ---------

Tax equivalent net interest income                              $ 28,978                                    $ 22,506
                                                              =============                               =============
Net interest margin                                                              3.69%                                      3.56%
                                                                            ==========                                  =========
Core net interest margin(3)                                                      3.89%                                      3.79%
                                                                            ==========                                  =========
-------------------------------
(1)  Liquidity  management assets include securities,  interest earning deposits
     with banks and federal funds sold.
(2)  Interest  income  on  tax  advantaged  loans  and  securities   reflects  a
     tax-equivalent adjustment based on a marginal federal corporate tax rate of
     35% and 34% in 2000  and  1999,  respectively.  This  total  adjustment  is
     $261,000  and $92,000  for the  six-month  periods  ended June 30, 2000 and
     1999, respectively.
(3)  The core net interest margin excludes the interest expense  associated with
     the Company's Trust Preferred Securities.

Net interest income is defined as the difference between interest income and fees on earning assets and interest expense on deposits, borrowings and long-term debt. The related net interest margin represents the net interest income on a tax-equivalent basis as a percentage of average earning assets during the period.

Tax-equivalent net interest income for the quarter ended June 30, 2000 totaled $15.0 million, an increase of $3.3 million, or 29%, as compared to the $11.7 million recorded in the same quarter of 1999. This increase mainly resulted from loan growth, the October 1999 acquisition of Tricom, Inc. of Milwaukee ("Tricom") and management's ability to control funding costs in the current interest rate environment. Tax-equivalent interest and fees on loans for the quarter ended June 30, 2000 totaled $31.2 million, an increase of $7.8 million, or 33%, over the prior year quarterly total of $23.4 million. This growth was predominantly due to a $259 million, or 23%, increase in average total loans.

For the second quarter of 2000, the net interest margin was 3.73%, an increase of 20 basis points when compared to the margin of 3.53% in the prior year quarter. The core net interest margin, which excludes the net impact of the Company's Trust Preferred Securities offerings was 3.94% for the second quarter of 2000, an increase of 18 basis points over the core net interest margin of 3.76% for the second quarter of 1999. The improved margin resulted primarily from higher yields on both loans and securities coupled with solid loan growth and the addition of Tricom.

The rate paid on interest-bearing deposits averaged 5.26% for the second quarter of 2000 versus 4.61% for the same quarter of 1999, an increase of 65 basis points. This increase was caused by continued increases in market rates, which was somewhat offset by management's decision to be less aggressive on its deposit pricing. The rate paid on short-term borrowings and notes payable increased to 6.24% in the second quarter of 2000 as compared to 4.10% in the same quarter of 1999, due primarily to a higher outstanding balance under the company's revolving credit agreement with an unaffiliated bank and a higher rate environment for the Company's short-term funding sources.

The yield on total earning assets for the second quarter of 2000 was 8.76% as compared to 7.94% in 1999, an increase of 82 basis points resulting primarily from increases in the prime lending rate, general market rate increases on liquidity management assets, and the acquisition of Tricom. The second quarter 2000 loan yield of 9.17% increased 71 basis points when compared to the prior year quarterly yield of 8.46% and was due primarily to a higher average prime lending rate of 9.24% during the second quarter of 2000 versus an average prime lending rate of 7.75% for the second quarter of 1999. The Company's loan portfolio does not re-price in a parallel fashion to increases in the prime rate due to a portion of the portfolio being longer-term fixed rate loans.

For the first six months of 2000, tax equivalent net interest income totaled $29.0 million and increased $6.5 million, or 29%, over the $22.5 million recorded in the same period of 1999. This increase was also mainly due to a combination of loan growth and the addition of Tricom. Interest and fees on loans, on a tax equivalent basis, totaled $60.0 million for the first six months of 2000, and increased $14.9 million, or 33%, over the same period of 1999. Average loans for the first six months of 2000 grew $272 million, or 25%, over the average for the first six months of 1999. The net interest margin for the first six months of 2000 was 3.69%, an increase of 13 basis points when compared to the same period in 1999. The core net interest margin was 3.89% for the first six months of 2000 and increased 10 basis points over the prior year period. Consistent with the second quarter margin improvement as noted above, the year-to-date margin increase was mainly the result of loan growth, the addition of Tricom and the ability to control funding costs in a rising rate environment.

The following table presents a reconciliation of the Company's tax-equivalent net interest income, calculated on a tax equivalent basis, between the three and six-month periods ended June 30, 1999 and June 30, 2000. The reconciliation sets forth the change in the tax-equivalent net interest income as a result of changes in volumes, changes in rates and the change due to the combination of volume and rate changes (in thousands):

                                                                                            Three Month           Six Month
                                                                                               Period               Period
                                                                                               ------               ------
Tax equivalent net interest income for the period ended June 30, 1999..........              $  11,650             $ 22,506
    Change due to average earning assets fluctuations (volume).................                  2,728                5,653
    Change due to interest rate fluctuations (rate)............................                    563                  827
    Change due to rate/volume fluctuations (mix)...............................                     53                   (8)

                                                                                      --------------------  -------------------
Tax equivalent net interest income for the period ended June 30, 2000 .........               $ 14,994             $ 28,978
                                                                                      ====================  ===================

NON-INTEREST INCOME

For the second quarter of 2000, non-interest income totaled $4.5 million and increased $2.4 million, or 113%, over the prior year quarter. For the first six months of 2000, non-interest income totaled $8.8 million and increased $4.4 million, or 98%, when compared to the same period in 1999. Gains from the sale of premium finance receivables, revenues from Tricom and increases in trust fees, deposit services charges and leased equipment rental income were partially offset by a lower level of fees from the sale of mortgage loans. The following table presents non-interest income by category (in thousands):

                                                               Three Months Ended                        Six Months Ended
                                                                    June 30,                                 June 30,
                                                       -----------------------------------      ----------------------------------
                                                             2000               1999                 2000                1999
                                                       -----------------   ----------------     ----------------    ---------------
Fees on mortgage loans sold                                    $  742             $  919              $ 1,225            $ 2,217
Service charges on deposit accounts                               479                347                  948                681
Trust fees                                                        494                250                  966                475
Administrative services revenue                                 1,141                  -                2,154                  -
Gain on sale of premium finance receivables                       996                263                2,237                263
Securities gains (losses), net                                   (28)                -                   (25)                -
Other income                                                      680                339                1,277                790
                                                       -----------------   ----------------     ----------------    ---------------
     Total non-interest income                                $ 4,504            $ 2,118              $ 8,782            $ 4,426
                                                       =================   ================     ================    ===============

Fees on mortgage loans sold include income from originating and selling residential real estate loans into the secondary market. For the quarter ended June 30, 2000, these fees totaled $742,000, a decline of $177,000, or 19%, from the prior year quarter. For the first six months of 2000, fees on mortgage loans sold totaled $1.2 million and declined $1.0 million, or 45%, when compared to the same period of 1999. These declines were due to lower levels of mortgage origination volumes, particularly refinancing activity, caused by the recent increases in mortgage interest rates.

Service charges on deposit accounts totaled $479,000 for the second quarter of 2000, an increase of $132,000 when compared to the same quarter of 1999. For the first six months of 2000, deposit service charges totaled $948,000 and increased $267,000 when compared to the same period of 1999. These increases were due to a

higher deposit base and a larger number of accounts at the banking subsidiaries. The majority of deposit service charges relates to customary fees on overdrawn accounts and returned items. The level of service charges received is substantially below peer group levels as management believes in the philosophy of providing high quality service without encumbering that service with numerous activity charges.

Trust fees totaled $494,000 for the second quarter of 2000, a $244,000, or 98%, increase over the same quarter of 1999. For the first six months of 2000, trust fees totaled $966,000 and increased $491,000, or 103%, over the same period of 1999. The increases were mainly the result of new business development efforts from the staff of experienced trust officers added since late 1998 with the formation of Wintrust Asset Management Company. Wintrust is committed to growing the trust and investment business in order to better service its customers and create a more diversified revenue stream. However, as the introduction of expanded trust and investment services continues to unfold, it is expected that overhead levels will be high when compared to the initial fee income that is generated. It is anticipated that trust fees will eventually increase to a level sufficient to absorb this overhead within the next two years.

The administrative services revenue contributed by Tricom, which was acquired in October 1999, added $1.1 million to total non-interest income in the second quarter of 2000 and $2.2 million for the first six months of 2000. This revenue comprises income from administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States. Tricom also earns interest and fee income from providing short-term accounts receivable financing to this same client base, which is included in the net interest income category.

As a result of strong loan originations during the second quarter of 2000, approximately $62 million of premium finance receivables were sold to an unrelated third party and resulted in the recognition of a $1.0 million gain. Through the first six months of 2000, approximately $133 million of premium finance receivables have been sold resulting in a year-to-date gain of $2.2 million. The Company currently has a philosophy of maintaining its average loan-to-deposit ratio in the range of 85-90%. During the second quarter of 2000, the ratio was approximately 87.6%. Accordingly, the Company sold excess premium finance receivables volume to an unrelated third party financial institution. Consistent with Wintrust's strategy to be asset-driven and the desire to maintain our loan-to-deposit ratio in the aforementioned range, it is probable that similar sales of premium finance receivables will occur in the future.

Other non-interest income for the second quarter totaled $680,000 and increased $341,000 over the prior year quarterly total of $339,000. For the first six months of 2000, other non-interest income totaled $1.3 million and increased $487,000, or 62%, over the same period of 1999. These increases were due primarily to increases in rental income from equipment leased through the MMF Leasing Services division of the Lake Forest Bank of $203,000 and $417,000, respectively, for the three and six months periods of 2000 compared 1999.

NON-INTEREST EXPENSE

Non-interest expense for the second quarter of 2000 totaled $12.9 million and increased $3.4 million, or 35%, from the second quarter 1999 total of $9.5 million. For the first six months of 2000, non-interest expense totaled $25.0 million and increased $5.9 million, or 31%, when compared to the prior year period. The continued growth and expansion of the de novo banks, the development of the trust and investment business, and the October 1999 acquisition of Tricom were the primary causes for this increase. Since June 30, 1999,

total deposits have grown 22% and total loan balances have risen 23%, requiring higher levels of staffing and other costs to both attract and service the larger customer base. The following table presents non-interest expense by category (in thousands):

                                                            Three Months                               Six Months
                                                           Ended June 30,                            Ended June 30,
                                                ------------------------------------       -----------------------------------
                                                       2000               1999                   2000               1999
                                                -------------------  ----------------      ------------------------------------
Salaries and employee benefits                           $ 6,793           $ 5,193               $ 13,128           $ 10,272
Occupancy, net                                             1,140               669                  2,150              1,345
Equipment expense                                          1,137               702                  2,286              1,330
Data processing                                              699               511                  1,379                993
Advertising and marketing                                    322               363                    571                732
Professional fees                                            357               276                    652                586
Other                                                      2,441             1,814                  4,832              3,806
                                                -------------------  ----------------      ------------------------------------
     Total non-interest expense                         $ 12,889           $ 9,528               $ 24,998           $ 19,064
                                                ===================  ================      ====================================

Salaries and employee benefits expense totaled $6.8 million for the second quarter of 2000, an increase of $1.6 million, or 31%, as compared to the prior year quarter total of $5.2 million. For the first six months of 2000, salaries and employee benefits expense totaled $13.1 million and increased $2.9 million, or 28%, when compared to the first six months of 1999. These increases were primarily due to the acquisition of Tricom, the expansion of the trust and investment business and the addition of four additional banking offices since June 30, 1999. As a percent of average total assets, on an annualized basis, salaries and employee benefits were 1.51% and 1.48% for the first six months of 2000 and 1999, respectively. The slight increase in this ratio is primarily a result of the administrative services staffing at Tricom in 2000. Since Tricom was not acquired until the fourth quarter of 1999, the 1999 ratio does not reflect those salaries and employee benefits.

For the second quarter of 2000, occupancy costs, equipment expense and data processing increased $471,000 (70%), $435,000 (62%) and $188,000 (37%), respectively, over the prior year first quarter. For the first six months of 2000, the respective increases were $805,000 (60%), $956,000 (72%) and $386,000 (39%). These increases were due to the general growth of the Company including the opening of several new banking facilities as discussed in the Overview and Strategy section, the acquisition of Tricom and the development of the trust and investment business.

Other non-interest expense, for the six months ended June 30, 2000, totaled $4.8 million and increased $1.0 million, or 27%, due mainly to the factors mentioned earlier. This category of expense includes loan expenses, correspondent bank service charges, postage, insurance, stationary and supplies, goodwill amortization and other sundry expenses. Goodwill and other intangibles amortization expense totaled $179,000 and $357,000 for the three and six month periods of 2000, respectively, compared to $35,000 and $70,000 for the same periods of 1999, respectively. The increases in goodwill and other intangibles amortization expense is a result of the acquisition of Tricom in October 1999.

Despite the Company's growth and the related increases in many of the non-interest expense categories, the net overhead ratio for the first six months of 2000 declined to 1.87% as compared to the first six months of 1999 ratio of 2.10%. The overhead ratio is within management's stated performance goal range of 1.50% - 2.00%.

INCOME TAXES

The Company recorded income tax expense of $1.9 million for the three months ended June 30, 2000 versus $1.0 million for the same period of 1999. For the first six months of 2000, approximately $3.7 million of income tax expense was recorded versus approximately $2.0 million in the prior year period. The increase was due primarily to the increase in operating income and the fact that 1999 also included the realization of approximately $225,000 and $300,000 of income tax benefits relating to recognition of prior net operating losses for the three and six month periods of 1999, respectively.

OPERATING SEGMENT RESULTS

As shown in Note 5 to the Unaudited Consolidated Financial Statements, the Company's operations consist of five primary segments: banking, premium finance, indirect auto, Tricom and trust. The Company's profitability is primarily dependent on the net interest income, provision for possible loan losses, non-interest income and operating expenses of its banking segment.

For the second quarter of 2000, the banking segment's net interest income totaled $13.8 million, an increase of $2.8 million, or 26%, as compared to the $11.0 million recorded in the same quarter of 1999. On a year-to-date basis, the banking segment net interest income totaled $26.4 million and increased $5.4 million, or 26%, as compared to the 1999 period. These increases were the direct result of earning asset growth of approximately 23% for the periods, particularly in the loan portfolio, as earlier discussed in the Net Interest Income section. The banking segment's non-interest income totaled $2.0 million for the second quarter of 2000 and increased $265,000, or 15%, when compared to the prior year quarter. The slight increase was due primarily to increased income from operating equipment leases and service charges on a higher level of deposit accounts. Somewhat offsetting those increases was a drop in fees on mortgage loans sold that was caused by the recent rise in mortgage interest rates and the related lower levels of refinancing activity. On a year-to-date basis, non-interest income totaled $3.7 million and declined $161,000, or 4%, as compared to the first six months of 1999. Although the majority of the banking segment's non-interest income categories increased due to higher volumes of accounts, the decline on a year-to-date basis was a direct result of the lower fees on mortgage loans in 2000 versus 1999 in the amount of $1.0 million. The banking segment's after-tax profit for the quarter ended June 30, 2000, totaled $3.4 million, an increase of $880,000, or 35%, as compared to the prior year quarterly total of $2.5 million. For the first six months of 2000, after-tax operating profit for the banking segment totaled $6.3 million and increased $1.4 million, or 28%, over the same period of 1999. This improved profitability resulted mainly from higher levels of net interest income created from the continued growth and maturation of the Company's de novo banks and branches.

Net interest income from the premium finance segment totaled $3.3 million for the quarter ended June 30, 2000 compared to $2.9 million for the same quarter of 1999. On a year-to-date basis, the premium finance segment net interest income totaled $6.4 million compared to $6.0 million recorded for the first six months of 1999. The increases in net interest income are a result of higher levels of outstanding receivables offset slightly by a higher funding costs associated with this portfolio in 2000. Non-interest income for the three months ended June 30, 2000 totaled $1.0 million compared to $263,000 for the same period of 1999. For the first six months of 2000, non-interest income for the premium finance segment totaled $2.2 million compared to the $263,000 recorded in the same period of 1999. The increases are a result of gains from the sale of additional premium finance receivables in 2000, as mentioned earlier in this report. After-tax profit for the premium finance segment totaled $1.1 million for the three-month period ended June 30, 2000, and increased $130,000, or 14%, over the same

period of 1999. For the six months ended June 30, 2000 and 1999, the after-tax profit for this segment was $6.3 million and $4.9 million, respectively. These increases were due mostly to higher levels of premium finance receivables created from new product offerings and targeted marketing programs and the additional gains from the sale of receivables.

The indirect auto segment recorded $1.8 million of net interest income for the second quarter of 2000, a decline of $255,000, or 13%, as compared to the 1999 quarterly total. On a year-to-date basis, net interest income declined $244,000, or 6%, to $3.7 million from the comparable period of 1999. The decline is due to management's efforts to reduce the level of outstanding loans in this portfolio and higher funding costs in 2000 compared to 1999. After-tax segment profit totaled $487,000 for the three-month period ended June 30, 2000, a decline of $251,000 when compared to the same period of 1999. For the first six months of 2000, after-tax operating profits were $1.0 million in 2000 compared to $1.4 million in the first six months of 1999. The decline in this segment's profitability was caused mainly by a higher level of credit losses, lower outstanding loan balances and compressed margins in 2000 versus 1999. See further discussion of credit quality information in the "ASSET QUALITY" section of this report.

The Tricom segment data reflects the net interest income, non-interest income and segment profit associated with short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, that Tricom provides to its clients in the temporary staffing industry. For the quarter and six months ended June 30, 2000, the Tricom segment added $836,000 and $1.6 million, respectively, to the Company's net interest income, $1.2 million and $2.2 million, respectively, to the Company's non-interest income, and $387,000 and $670,000, respectively, to the Company's net income. No results are included for the first quarter of 1999 because Tricom was acquired in October 1999 using the purchase method of accounting.

The trust segment recorded non-interest income of $494,000 for the second quarter of 2000 as compared to $250,000 for the same quarter of 1999, an increase of $244,000, or 98%. On a year-to-date basis, non-interest income for the trust segment increased to $966,000 from $475,000 in the prior year period, an increase of 103%. The increase was the result of continued new business development efforts by a larger staff of experienced trust professionals that were hired in connection with the October 1998 start-up of WAMC. The trust segment's after-tax loss totaled $94,000 for the three-month period ended June 30, 2000, as compared to after-tax loss of $180,000 for the same period of 1999. For the first six months of 2000 and 1999, after-tax losses for this segment were $215,000 and $412,000, respectively. The decline in after-tax segment losses was a direct result of the increased asset base managed by WAMC and the associated fees. As more fully discussed in the Overview and Strategy section of this analysis, management expects the start-up phase for the trust segment to continue for up to two years before its operations become profitable.

FINANCIAL CONDITION

Total assets were $1.86 billion at June 30, 2000, an increase of $348 million, or 23%, over the $1.52 billion a year earlier, and $184 million, or 11%, over the $1.68 billion at December 31, 1999. Growth at the newer banks and branches coupled with continued market share growth at the more mature banks were the primary factors for these increases. Total funding liabilities, which include deposits, short-term borrowings, notes payable and long-term debt, were $1.73 billion at June 30, 2000, and increased $311 million, or 22%, over the prior year, and $169 million, or 11%, since December 31, 1999. These increases were primarily utilized to fund growth in the loan portfolio and certain discretionary investment leveraging transactions.

                                     June 30, 2000                 December 31, 1999               June 30, 1999
                             ------------------------------- ------------------------------ -----------------------------
Loans:                            Balance         Percent         Balance        Percent        Balance         Percent
                             ------------------ ------------ ------------------ ----------- -----------------  ----------
  Commercial and commercial
      real estate                  $ 552,694          33%          $ 485,776        32%          $ 420,528         30%
  Premium finance, net               250,796          15             219,341        15             216,209         16
  Indirect auto, net                 234,774          14             255,410        17             243,804         18
  Home equity                        157,042           9             139,194         9             118,436          8
  Residential real estate            135,746           8             111,026         7              99,987          7
  Tricom finance receivables          20,978           1              17,577         1                   -          -
  Installment and other               48,794           3              49,925         3              38,205          3
                             ------------------ ------------ ------------------ ----------- -----------------  ----------
Total loans, net of
     unearned income               1,400,824          83           1,278,249        84           1,137,169         82
                             ------------------ ------------ ------------------ ----------- -----------------  ----------
Securities and money
    market investments               287,208          17             236,573        16             244,920         18
                             ------------------ ------------ ------------------ ----------- -----------------  ----------

Total earning assets             $ 1,688,032         100%        $ 1,514,822       100%        $ 1,382,089        100%
                             ================== ============ ================== =========== =================  ==========

Earning assets as of June 30, 2000, increased $306 million, or 22%, over the balance a year earlier, and $173 million, or 11%, over the balance at the end of 1999. The ratio of earning assets as a percent of total assets remained consistent at approximately 90% - 91% as of each reporting period date shown in the above table.

Total net loans were $1.40 billion at June 30, 2000, an increase of $123 million, or 10%, since December 31, 1999, and an increase of $264 million, or 23%, since June 30, 1999. Solid loan growth in the core commercial loan, home equity and residential real estate portfolios were the main factor for these increases. Also, showing increases were the specialty premium finance and Tricom finance receivable segments, the latter category which was added as a result of the October 1999 acquisition of Tricom. Offsetting the increases in all of the other loan categories was a decline in the balance of indirect auto loans. Because of the impact of the current economic and competitive environment on interest rates surrounding this portfolio, management has begun to reduce the level of new indirect auto loans originated and is dedicating additional resources to optimize the profitability of this loan segment at slightly reduced levels of outstanding receivables. Total net loans comprised 83% of total earning assets at June 30, 2000 as compared to 82% a year earlier and 84% at the end of 1999.

Commercial and commercial real estate loans, the largest loan category, comprised 33% of total earning assets and 39% of total loans as of June 30, 2000 and has increased $132.2 million, or 31%, since June 30, 1999 and $66.9 million, or 14%, since the end of 1999. The strong growth experienced over the past year has resulted mainly from a healthy economy and the hiring of additional experienced lending officers.

Net premium finance receivables totaled $250.8 million at June 30, 2000 and comprised 18% of the total loan portfolio. This total balance increased $34.6 million, or 16%, since June 30, 1999 and $31.5 million, or 14%, since the end of 1999. This growth was primarily the result of increased market penetration from new product offerings and marketing programs. Over the past few years, the majority of premium finance receivables

originated by FIFC were being sold to the Banks and consequently remained an asset of the Company. However, since the second quarter of 1999, as a result of the continued solid growth in loan originations, FIFC has been selling a portion of new receivables to an unrelated third party. During the second quarter of 2000 the Company sold approximately $62 million of premium finance receivables to an unrelated third party at a gain of $1.0 million. For the first six months of 2000, approximately $133 million of premium finance receivables at a gain of $2.2 million. In addition to recognizing gains on the sale of these receivables, the proceeds provided the Company with additional liquidity. It is possible that similar future sales may occur depending on the level of new volume growth in relation to the desired capacity within the Banks' loan portfolios.

Net indirect auto loans comprised 14% of total earning assets and 17% of total loans as of June 30, 2000. This portfolio decreased $9.0 million, or 4%, from a year ago, and decreased $20.6 million, or 8%, since the end of 1999. The decrease in the balance is the result of a higher interest rate environment experienced during the first six months of 2000 coupled with a decision by management to reduce its reliance upon indirect automobile lending as a percent of the overall earning asset portfolio due to competitive pricing and margin concerns. As such, management intends to maintain the outstanding level of the portfolio near or slightly below the existing level. The Company utilizes credit underwriting routines that management believes result in a high quality new and used auto loan portfolio. The Company does not currently originate any significant level of sub-prime loans, which are made to individuals with impaired credit histories at generally higher interest rates, and accordingly, with higher levels of credit risk. Management continually monitors the dealer relationships and the Banks are not dependent on any one dealer as a source of such loans.

The October 1999 acquisition of Tricom added a new category of specialty finance receivables to the Company's earning asset portfolio. These receivables consist of high-yielding short-term accounts receivable financing to clients in the temporary staffing industry located throughout the United States. At June 30, 2000, outstanding finance receivables totaled $21.0 million, an increase of $3.4 million, or 19%, from the December 31, 1999 balance.

Home equity loans totaled $157.0 million at June 30, 2000 and increased $38.6 million, or 33%, since a year earlier and $17.8 million, or 13%, as compared to the end of 1999. This category of loans continues to represent approximately 8%-9% of total earning assets and has grown in proportion to the entire growth of the Company. The growth is due mainly to targeted marketing programs over the past year and higher usage of existing lines than in the past. The marketing programs generally use a short-term low initial interest rate as an incentive to the borrower. Unused commitments on home equity lines of credit have increased $27.1 million, or 15%, over the balance at June 30, 1999 and totaled $204.7 million at June 30, 2000.

Residential real estate loans totaled $135.7 million as of June 30, 2000 and increased $35.8 million, or 36%, over a year ago and $24.7 million, or 22%, since December 31, 1999. Mortgage loans held for sale are included in this category and totaled $12.1 million as of June 30, 2000, $8.1 million as of December 31, 1999 and $11.5 million as of June 30, 1999. The Company collects a fee on the sale of these loans into the secondary market, as discussed earlier in the Non-interest Income section of this analysis. As these loans are predominantly long-term fixed rate loans, the Company eliminates the interest rate risk associated with these loans by selling them into the secondary market. The remaining residential real estate loans in this category are maintained within the Banks' portfolios and include mostly adjustable rate mortgage loans and shorter-term fixed rate mortgage loans. The growth in this loan category has been due mainly to the relatively low mortgage interest rate environment experienced until recently and a continued strong local housing market.

Securities and money market investments (i.e. federal funds sold and interest-bearing deposits with banks) totaled $287.2 million at June 30, 2000, an increase of $50.6 million, or 21%, since December 31, 1999 and $42.3 million, or 17%, since a year earlier. This category as a percent of total earning assets was 17% at June 30, 2000 versus 16% and 18% at December 31, 1999 and June 30, 1999; respectively.

The Company maintained no trading account securities at June 30, 2000 or as of any of the other previous reporting dates. The balances of securities and money market investments fluctuate frequently based upon deposit inflows, loan demand and proceeds from loan sales. As a result of anticipated growth in the development of the de novo banks, it has been Wintrust's policy to generally maintain its securities and money market portfolio in short-term, liquid, and diversified high credit quality securities in order to facilitate the funding of quality loan demand as it emerges and to keep the Banks in a liquid condition in the event that deposit levels fluctuate.

                                    June 30, 2000                    December 31, 1999                    June 30, 1999
                           ---------------------------------  ---------------------------------  --------------------------------
                                                 Percent                            Percent                           Percent
                               Balance          of Total           Balance         of Total           Balance         of Total
                           -----------------  --------------  ------------------ --------------  ------------------ -------------
Demand                           $ 173,967            11%           $ 154,034            11%            $ 124,642           9%
NOW                                154,056             9              130,625             9               139,700          11
Money market                       284,918            17              252,483            17               232,198          17
Savings                             74,434             5               72,718             5                73,445           6
Certificates of deposit            941,817            58              853,762            58               764,740          57
                           -----------------  --------------  ------------------ --------------  ------------------ -------------

             Total             $ 1,629,192           100%         $ 1,463,622           100%          $ 1,334,725         100%
                           =================  ==============  ================== ==============  ================== =============

The percentage mix of deposits as of June 30, 2000 was relatively consistent with the deposit mix as of the prior year dates. Growth in both the number of accounts and balances has been primarily the result of newer bank and branch growth, and continued marketing efforts at the more established banks to create additional deposit market share.

SHORT-TERM BORROWINGS AND NOTES PAYABLE

As of June 30, 2000, the Company's short-term borrowings totaled $46.8 million and consisted primarily of short-term repurchase agreements utilized to leverage certain investment transactions within several banks' security portfolios and certain customer repurchase agreements. At June 30, 2000, the Company also had $4.9 million outstanding on its $40 million revolving credit line with an unaffiliated bank. The outstanding balance on this credit line as of June 30, 1999 was $5.1 million and $8.4 million at December 31, 1999. The Company continues to maintain the revolving credit line for corporate purposes such as to provide capital to fund continued growth at the Banks, expansion of WAMC, purchases of treasury stock, possible future acquisitions and for other general corporate matters.

LONG-TERM DEBT - TRUST PREFERRED SECURITIES

For each of the reporting periods, the long-term debt category included $31.05 million of 9.00% Cumulative Trust Preferred Securities, which were publicly sold in an offering that was completed in October 1998. In June of 2000, the Company issued another $20.0 million of Trust Preferred Securities bringing the total long-term debt category to $51.05 million. The June 2000 offering consisted of 800,000 shares of $25.00 par value securities with a 10.50% interest rate. The sale of the Trust Preferred Securities increased Wintrust's regulatory capital and provided for and will provide for the continued growth of the banking franchise, and for possible future acquisitions of other banks or finance-related companies.

The ability to treat these Trust Preferred Securities as regulatory capital under Federal Reserve guidelines, coupled with the Federal income tax deductibility of the related interest expense, provides the Company with a cost-effective form of capital. See Note 4 to the Unaudited Consolidated Financial Statements for further information on the first Trust Preferred Securities offering.

SHAREHOLDERS' EQUITY

Total shareholders' equity was $98.4 million at June 30, 2000 and increased $19.2 million since June 30, 1999 and $5.4 million since the end of 1999. These increases were the result of the Company's corporate earnings offset by net unrealized losses of the available-for-sale security portfolio, dividend payments and stock repurchases. The annualized return on average equity for the quarter ended June 30, 2000 increased to 13.86% as compared to 11.55% for the prior year period.

The following table reflects various consolidated measures of capital at June 30, 2000, December 31, 1999 and June 30, 1999:

                                                                 June 30,             December 31,            June 30,
                                                                   2000                   1999                  1999
                                                           ----------------------  -------------------   --------------------
Leverage ratio                                                          6.9%                 7.1%                   7.2%
Ending tier 1 capital to risk-based asset ratio                         7.3%                 7.8%                   7.9%
Ending total capital to risk-based asset ratio                          8.9%                 8.4%                   8.9%
Dividend payout ratio                                                   6.9%                 0.0%                   0.0%

On January 27, 2000, Wintrust declared its first semi-annual cash dividend of $0.05 per common share. The dividend was paid on February 24, 2000. Subsequent to the end of the June 30, 2000 quarter, the Company declared its second semi-annual cash dividend of $0.05 per common share to shareholders of record as of August 10, 2000 and payable on August 24, 2000. Additionally, the Company initiated a stock buyback program authorizing the repurchase of up to 300,000 shares of its common stock. Through June 30, 2000, the Company repurchased a total of 85,700 shares at an average price of $15.33 per share.

To be "adequately capitalized", an entity must maintain a leverage ratio of at least 4.0%, a Tier 1 risk-based capital ratio of at least 4.0%, and a total risk-based capital ratio of at least 8.0%. To be considered "well capitalized," an entity must maintain a leverage ratio of at least 5.0%, a Tier 1 risk-based capital ratio of at least 6.0%, and a total risk-based capital ratio of at least 10.0%. At June 30, 2000, the Company was considered "well capitalized" under both the leverage ratio and the Tier 1 risk-based capital ratio, and was considered

"adequately capitalized" under the total risk-based capital ratio. The Company's total risk-based capital ratio increased since the prior year end due to the issuance of the Trust Preferred Securities as discussed above in the "Long-term Debt - Trust Preferred Securities" section of this report.

The Company attempts to maintain an efficient capital structure in order to provide higher returns on equity. Additional capital is required from time to time, however, to support the growth of the organization. The issuance of additional common stock or additional trust preferred securities are the primary forms of capital that the Company considers as it evaluates its capital position.

                                                             Three Months Ended                            Six Months Ended
                                                                  June 30,                                     June 30,
                                                         2000                 1999                  2000                  1999
                                                  -------------------     ----------------     -----------------     --------------
 Balance at beginning of period                          $  9,359              $ 7,518                $8,783                $7,034

Provision for possible loan losses                          1,223                  933                 2,364                 1,717

Charge-offs
 Core banking loans                                           316                  302                   446                   403
 Indirect automobile loans                                    320                  479                   631                   639
 Tricom receivables                                            73                   --                    73                    --
 Premium finance receivables                                  158                   95                   359                   190
                                                  -------------------     ----------------     -----------------     --------------
    Total charge-offs                                         867                  876                 1,509                 1,232
Recoveries
 Core banking loans                                             3                    4                    11                    10
 Indirect automobile loans                                     30                   14                    73                    28
 Tricom receivables                                            --                   --                    --                    --
 Premium finance receivables                                   44                   84                    70                   120
                                                  -------------------     ----------------     -----------------     --------------
     Total recoveries                                          77                  102                   154                   158
                                                  -------------------     ----------------     -----------------     --------------

 Net charge-offs                                             (790)                (774)               (1,355)               (1,074)
                                                  -------------------     ----------------     -----------------     --------------

 Balance at June 30                                      $  9,792              $ 7,677                $9,792                $7,677
                                                  ===================     ================     =================     ==============

 Loans at June 30                                                                                 $1,400,824            $1,137,169
                                                                                               =================     ==============


 Allowance as a percentage of loans                                                                     0.70%                0.68%
                                                                                               =================     ==============

 Annualized net charge-offs as a percentage of average:
       Core banking loans                                                                               0.10%                0.12%
       Indirect automobile loans                                                                        0.45%                0.54%
       Premium finance receivables                                                                      0.23%                0.07%
                                                                                               -----------------     --------------
           Total loans                                                                                  0.20%                0.20%
                                                                                               =================     ==============
       Annualized provision for
           possible loan losses                                                                        57.32%               62.55%
                                                                                               =================     ==============

Management believes that the loan portfolio is well diversified and well secured, without undue concentration in any specific risk area. Control of loan quality is continually monitored by management and is reviewed by the Banks' Board of Directors and their Credit Committees on a monthly basis. Independent external review of the loan portfolio is provided by the examinations conducted by regulatory authorities and an independent loan review performed by an entity engaged by the Board of Directors. The amount of additions to the allowance for possible loan losses, which are charged to earnings through the provision for possible loan losses, are determined based on a variety of factors, including actual charge-offs during the year, historical loss experience, delinquent and other potential problem loans, and an evaluation of economic conditions in the market area.

The provision for possible loan losses totaled $1.2 million for the second quarter of 2000, an increase of $290,000 from a year earlier. For the first six months of 2000, the provision totaled $2.4 million and increased $647,000, or 38%, over the same period of 1999. The higher provision levels were necessary to cover a 23% increase in loan balances compared to June 30, 1999. For the six months ended June 30, 2000, net charge-offs totaled $1.4 million and increased from the $1.1 million of net charge-offs recorded in the same period of 1999. On a ratio basis, net charge-offs as a percentage of average loans remained consistent at 0.20% for the first six months of 2000 and 1999.

Management believes the allowance for possible loan losses is adequate to cover inherent losses in the portfolio. There can be no assurance, however, that future losses will not exceed the amounts provided for, thereby affecting future results of operations. The amount of future additions to the allowance for possible loan losses will be dependent upon the economy, changes in real estate values, interest rates, the view of regulatory agencies toward adequate reserve levels, the level of past-due and non-performing loans, and other factors.

                                                      June 30,             December 31,              June 30,
                                                        2000                   1999                    1999
                                                        ----                   ----                    ----
Past Due greater than 90 days
     and still accruing:
      Core banking loans                                   $  438                  $  713                 $  413
      Indirect automobile loans                               362                     391                    168
      Premium finance receivables                           1,817                   1,523                  1,243
                                                ---------------------  ----------------------  ---------------------
          Total                                             2,617                   2,627                  1,824
                                                ---------------------  ----------------------  ---------------------

Non-accrual loans:
      Core banking loans                                      626                   1,895                  1,478
      Indirect automobile loans                               391                     298                    307
      Premium finance receivables                           2,548                   2,145                  1,354
                                                ---------------------  ----------------------  ---------------------
          Total non-accrual loans                           3,565                   4,338                  3,139
                                                ---------------------  ----------------------  ---------------------

Total non-performing loans:
      Core banking loans                                    1,064                   2,608                  1,891
      Indirect automobile loans                               753                     689                    475
      Premium finance receivables                           4,365                   3,668                  2,597
                                                ---------------------  ----------------------  ---------------------
          Total non-performing loans                        6,182                   6,965                  4,963
                                                ---------------------  ----------------------  ---------------------

Other real estate owned                                         -                       -                      -
                                                ---------------------  ----------------------  ---------------------

Total non-performing assets                               $ 6,182                 $ 6,965                $ 4,963
                                                =====================  ======================  =====================

Total non-performing  loans by category as a percent of its own respective
  category:
      Core banking loans                                       0.12%                   0.32%                  0.28%
      Indirect automobile loans                                0.32%                   0.27%                  0.19%
      Premium finance receivables                              1.74%                   1.67%                  1.20%
                                                ---------------------  ----------------------  ---------------------
         Total non-performing loans                            0.44%                   0.54%                  0.44%
                                                ---------------------  ----------------------  ---------------------

Total non-performing assets as a
    percentage of total assets                                 0.33%                   0.41%                  0.33%

Allowance for possible loan losses as
  a percentage of non-performing loans                       158.40%                 126.10%                154.68%

NON-PERFORMING CORE BANKING LOANS

Total non-performing loans for the Company's core banking business were $1.1 million, or 0.12%, of the Company's core banking loans as of June 30, 2000, and were down from the ratios of 0.32% as of December 31, 1999 and 0.28% as of June 30, 1999. When comparing the June 30, 2000 total to the balance of $2.6 million as of December 31, 1999, total non-performing core loans declined $1.5 million. Non-performing core banking loans consist primarily of a small number of commercial and real estate loans, of which management believes are well secured and in the process of collection. The small number of such non-performing loans allows management the opportunity to monitor closely the status of these credits and work with the borrowers to resolve these problems effectively.

                                         As of and for the       As a                    As of and for the      As a
                                         six-months ended    % of Premium                six-months ended   % of Premium
                                             6/30/00         Finance Rec.                    6/30/99        Finance Rec.
                                             -------         ------------                    -------        ------------
Non-performing premium finance
     receivables                             $4,365,000         1.74%                       $2,597,000         1.20%

Net charge-offs of premium
     finance receivables                        289,000         0.23%                           70,000         0.07%

It is important to note that the ratio of net charge-offs is substantially less than the ratio of non-performing assets. Management has a goal of maintaining credit losses for this portfolio at a level below 35 basis points of average premium finance loans outstanding. The recent growth in the portfolio has contributed to the increase in delinquent accounts and management has implemented additional collection procedures and invested in additional collection staff and is diligently working to reduce the level of delinquent accounts. It should be noted that an increase in delinquent accounts also results in additional late charge income from the borrowers that helps to offset the impact of the higher level of net charge-offs.

The ratio of non-performing premium finance receivables fluctuates throughout the year due to the nature and timing of canceled account collections from insurance carriers. Due to the nature of collateral for premium finance receivables, it customarily takes 60-150 days to convert the collateral into cash collections. Accordingly, the level of non-performing premium finance receivables is not necessarily indicative of the loss inherent in the portfolio. In the event of default, the Company has the power to cancel the insurance policy and collect the unearned portion of the premium from the insurance carrier. In the event of cancellation, the cash returned in payment of the unearned premium by the insurer should generally be sufficient to cover the receivable balance, the interest and other charges due. Due to notification requirements and processing time by most insurance carriers, many receivables will become delinquent beyond 90 days while the insurer is processing the return of the unearned premium. Management continues to accrue interest until maturity as the unearned premium is ordinarily sufficient to pay-off the outstanding balance and contractual interest due.

Non-performing Indirect Automobile Loans

Total non-performing indirect automobile loans were $753,000 at June 30, 2000, compared to $689,000 at December 31, 1999 and $475,000 at June 30, 1999. The ratio of these non-performing loans has increased slightly to 0.32% of total indirect automobile loans at June 30, 2000 from 0.27% at December 31, 1999 and 0.19% at June 30, 1999. As noted in the Allowance for Possible Loan Losses table, net charge-offs as a percent of total indirect automobile loans decreased from 0.54% in the first half of 1999 to 0.45% in the first half of 2000. Despite the increase in the level of non-performing loans, these ratios continue to be below standard industry ratios for this type of loan category. However, based on the impact of the current economic and competitive environment surrounding this portfolio, management has begun to reduce the level of new loans originated and is dedicating additional resources to reduce the level of delinquencies.

Potential Problem Loans

In addition to those loans disclosed under "Past Due Loans and Non-performing Assets," there are certain loans in the portfolio which management has identified, through its problem loan identification system, which exhibit a higher than normal credit risk. However, these loans are still considered performing and, accordingly, are not included in non-performing loans. Examples of these potential problem loans include certain loans that are in a past-due status, loans with borrowers that have recent adverse operating cash flow or balance sheet trends, or loans with general risk characteristics that the loan officer feels might jeopardize the future timely collection of principal and interest payments. Management's review of the total loan portfolio to identify loans where there is concern that the borrower will not be able to continue to satisfy present loan repayment terms includes factors such as review of individual loans, recent loss experience and current economic conditions. The principal amount of potential problem loans as of June 30, 2000 and December 31, 1999 was approximately $17.1 million and $14.4 million, respectively.

LIQUIDITY

Wintrust manages the liquidity position of its banking operations to ensure that sufficient funds are available to meet customers' needs for loans and deposit withdrawals. The liquidity to meet the demand is provided by maturing assets, sales of premium finance receivables, liquid assets that can be converted to cash, and the ability to attract funds from external sources. Liquid assets refer to federal funds sold and to marketable, unpledged securities, which can be quickly sold without material loss of principal.

INFLATION

A banking organization's assets and liabilities are primarily monetary. Changes in the rate of inflation do not have as great an impact on the financial condition of a bank as do changes in interest rates. Moreover, interest rates do not necessarily change at the same percentage, as does inflation. Accordingly, changes in inflation are not expected to have a material impact on the Company. An analysis of the Company's asset and liability structure provides the best indication of how the organization is positioned to respond to changing interest rates.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to anticipated improvements in financial performance and management's long-term performance goals, as well as statements relating to the anticipated effects on results of operations and financial condition from expected development or events, the Company's business and growth strategies, including anticipated internal growth, plans to form additional de novo banks and to open new branch offices, and to pursue additional potential development or acquisition of banks, specialty finance or fee related businesses. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

o The level of reported net income, return on average assets and return on average equity for the Company will in the near term continue to be impacted by start-up costs associated with de novo bank formations, branch openings, and expanded trust and investment operations. De novo banks may typically require 13 to 24 months of operations before becoming profitable, due to the impact of organizational and overhead expenses, the start-up phase of generating deposits and the time lag typically involved in redeploying deposits into attractively priced loans and other higher yielding earning assets. Similarly, the expansion of trust and investment services through the Company's new trust subsidiary, WAMC, is expected to continue in a start-up phase during the next two years, before becoming profitable.
o The Company's success to date has been and will continue to be strongly influenced by its ability to attract and retain senior management experienced in banking and financial services.
o Although management believes the allowance for possible loan losses is adequate to absorb losses that may develop in the existing portfolio of loans and leases, there can be no assurance that the allowance will prove sufficient to cover actual future loan or lease losses.
o If market interest rates should move contrary to the Company's gap position on interest earning assets and interest bearing liabilities, the "gap" will work against the Company and its net interest income may be negatively affected.
o The financial services business is highly competitive which may affect the pricing of the Company's loan and deposit products as well as its services.
o The Company's ability to adapt successfully to technological changes to compete effectively in the marketplace.
o Unforeseen future events that may cause slower than anticipated development and growth of the Tricom business, changes in the temporary staffing industry or difficulties integrating the Tricom acquisition.
o The Company may not identify attractive opportunities to expand in the future through acquisitions of other community banks, specialty finance companies or fee-based businesses or may have difficulty negotiating potential acquisitions on terms considered acceptable to the Company.
o Changes in the economic environment, competition, or other factors, may influence the anticipated growth rate of loans and deposits, the quality of the loan portfolio and loan and deposit pricing.

ITEM 3